Taxpayers and tax practitioners have in recent months been surprised to find their medical claim tax credits queried by SARS. Up to this year the processing of the tax credit has gone smoothly.

To many taxpayers such as those with disabilities, pensioners and lower income taxpayers their tax credit is significant.

What is SARS querying?

The Medical Tax Credit is a rebate to taxpayers who incur defined medical tax expenses. Part of these allowed expenses is the out-of-pocket medical expenses incurred by the taxpayer. In many cases this is claimed as shown on the Medical Aid tax certificate which is sent to SARS direct by the Medical Aid. The certificate shows your medical aid contributions plus expenses not allowed by your Medical Aid scheme – typically, these consist of expenses either not covered or partially covered by the Medical Aid and/or expenses submitted after you have reached your threshold of allowable medical expenses.

According to tax practitioners SARS has begun to ask for documentation (invoices and proof of payment) for out-of-pocket medical expenses shown on the Medical Aid tax certificate.

How to avoid problems

SARS denies it has changed the way it assesses the tax credit and the reason why there are problems is that taxpayers are claiming expenses over and above those shown on Medical Aid tax certificates. In these cases SARS is asking for documentation to substantiate these additional claims. The reason why it has cropped up this year is that, for the first time, SARS is populating taxpayers’ returns with the information received from Medical Aids. If the claim by the taxpayer does not agree with the Medical Aid certificate, then SARS will seek to verify the taxpayers’ claim.

Keep abreast of what SARS is doing and plan accordingly. Make sure that you keep all documentation and be sure you can justify medical expenses claimed over and above what your tax certificates show.